Growth may be less than 2pct, says central banker

14-Feb-2020 Intellasia | BangkokPost | 6:02 AM Print This Post

The economy may grow by less than 2 percent this year while exports are likely to contract, mainly from the impact of the coronavirus outbreak, a senior central bank official said on Thursday.

The outbreak is hitting Thailand’s lucrative tourism market hard and the country’s exports to China are also affected, Don Nakornthab, senior director of the economic and policy department of the Bank of Thailand, told a business seminar.

“This year, growth of less than 2 percent is possible,” Don said.

“The first quarter should be the weakest of the year, with growth highly likely to be below 1%,” he said.

The central bank said previously its 2.8 percent growth forecast for this year would be missed. It reviews economic projections next month.

For the final quarter of 2019, annual growth was estimated at 2.0-2.2%, he added.

Official 2019 gross domestic product (GDP) data is due on Monday.

The tourism ministry expects the virus outbreak to cut the number of foreign tourists by 5 million this year, resulting in a loss of 250 billion baht, or 1.5 percent of GDP, Don said.

Earlier, the Tourism Authority of Thailand predicted a fall of 2 million tourists from China, the biggest source of visitors, this year.

Last year, Thailand welcomed a record 39.8 million foreign tourists, with Chinese visitors at nearly 11 million. Spending by foreign tourists accounted for 11 percent of GDP last year.

Over the past five years, the tourist sector and related businesses made up an average 20 percent of GDP, Don said.

Don said exports might contract this year, rather than rise 0.5 percent as earlier projected, due to stalled shipments to China, the country’s second-largest export market.

On the baht, Don said a weaker currency was not helping the economy much and it was still not in line with economic fundamentals.

“Prices are not as important as confidence, which will make people travel here,” he said.

The baht may be weakening further as the economy slows, he said.

The baht has depreciated by 4 percent against the US dollar so far this year, becoming Asia’s worst-performing currency.

Don said a recent cut in the policy rate to a record low of 1.0 percent might not help boost the economy much as it was already very low, but the central bank wanted to send a signal to sectors to help shore up the economy.


Category: Thailand

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